Brian Armstrong, CEO of Coinbase, the third-largest crypto exchange in the world, published the exchange’s token listing process on Saturday. In an X post, Armstrong noted that the move aims to bolster transparency of Coinbase’s listing process. He wrote:
“…listings are free and merit-based. Every asset is evaluated against the same standards.”
How tokens are listed on Coinbase
According to the blog post titled ‘A Guide to the Digital Asset Listing Process at Coinbase,’ there are five key steps:
The first step involves submitting an application. Project developers have to fill an online questionnaire that asks for key information, from whitepaper and tokenomics to team background and source code.
Based on the submission, Coinbase assesses business factors, including market demand, community traction, and the technical requirements of integrating it with the exchange.
The application then goes through a thorough review process by the legal, compliance, and technical security team of Coinbase. From the legal perspective, Coinbase mainly analyses whether a token will potentially be considered a security.
The exchange also investigates the token’s on-chain activity and token distribution to ward off consumer safety risks and financial crime.
Additionally, the exchange also runs a security check for technical vulnerabilities by reviewing the contract code, design, and operational risks. In case of new blockchains, Coinbase evaluates aspects like technical design, consensus mechanism, network resilience, and governance model.
The exchange keeps the token issuers apprised of the review process via emails or phone calls. Once the token is approved by the Core review teams, it starts trading on Coinbase once the exchange completes technical integration.
The blog post notes:
“Our [listing] process is thorough because our standards are designed to protect customers, support healthy markets, and give projects the strongest possible foundation for long-term success.”
Token listing timeline and rollout
In general, Coinbase takes about a week to conduct due-diligence of a token. Once the token is approved, the exchange takes around two weeks for the technical integration to enable trading.
The post noted that in general, the exchange takes less than 30 days from review to list a token. However, the timeline can be significantly shorter or longer, based on factors such as the token’s complexity, whether its network is supported, the responsiveness of the project team, and the time it takes to complete the technical requirements for trading and custody.
Furthermore, listing priority and timeline also depends on Coinbase’s assessment of the token’s demand, traction among holders, community sentiment, and track-record of the team.
Coinbase also ensures that after a token is approved for listing, it is rolled out in a phased manner. First, Coinbase allows users to only deposit tokens to build liquidity.
Then, limit orders are collected for at least 10 minutes to determine an indicative opening price for the token. The auction concludes either with a matching trade or with an opening quote in case of no match.
This is followed by trading state, where the token can start with limit only orders or full trading.
Common hurdles and reasons for token listing delay
There are three major issues that contribute towards the delay of a token’s listing.
Firstly, the regulatory risk profile of a project increases if its public statements do not clearly state the token’s purpose, governance rights, and real-world usage. Projects that claim their token is ‘going to the moon’ without evidence to back the claim, for instance, face challenges with listing their token on Coinbase.
Secondly, from the blockchain security perspective, Coinbase evaluates the degree of centralization and single points of control to assess risk.
Lastly, projects that submit incomplete applications face delays in the review process. Failure to inform Coinbase of any major changes in the project during the review can also cause delays.